The Government will introduce a new property title that can be claimed over the foreshore and seabed.
Maori will be able to make their claims for "customary title" through the courts or in negotiation with the Government.
If their claim succeeds, they will receive a deed giving title to a coastal area.
It will be a property right, but they will not be able to exercise full ownership rights. They will not be able to sell the property or block public access.
But they will have great control, such as vetoing or initiating development, and permitting activities.
They will have the right to non-nationalised minerals, such as iron-sands, beneath it.
Ngai Tahu leader Mark Solomon called it an ownership right but "inalienable" - unable to be sold.
Prime Minister John Key said only a small number of iwi and hapu would be successful in claiming customary title because they would have to show continuous and exclusive occupation of the area claimed since 1840.
The Foreshore and Seabed Act 2004 extinguished Maori rights to test customary title in the courts, after a Court of Appeal decision in 2002, and the Government asserted Crown ownership of the foreshore and seabed.
Mr Key said it was important for the country to settle the issue "so it does not remain as a weeping sore that would have to be addressed at some stage by a future government".
The Government has also agreed to declare in law that Maori have mana over the foreshore and seabed.
The recognition will cite specific iwi and hapu with coastal areas, though more than one group will be able to have a historic association with an area recognised.
The new law will also spell out to councils and other statutory organisations what rights the recognised iwi and hapu have on conservation issues in their area.
The universal recognition or "mana tukuiho" was the main change that emerged yesterday after agreement between National, the Maori Party and the Iwi Leaders Group to repeal the Foreshore and Seabed Act 2004.
The Government also agreed that iwi which have already had a Treaty of Waitangi settlement can make a new claim for customary title in the foreshore and seabed.
The National-led Government largely stood firm on the proposals it issued in March despite disagreement from the Maori Party and the iwi group.
The Maori groups opposed ownership being in the "public domain" and wanted it vested jointly in Maori and the Crown.
They also wanted to lower the threshold at which iwi and hapu could claim customary title.
The sweeteners that got them over the line yesterday appear to be the new "mana tukuiho" - recognition for all iwi with a coastal connection, whether or not they meet the test for customary title - and the assurance that all coastal tribes, including those that have settled, would be welcome at the negotiating table.
Attorney-General Chris Finlayson said the same test for customary title would apply whether groups negotiated directly with the Government or went through the courts.
Maori Party co-leader Pita Sharples described customary title as a "full-blooded title".
"It's like fee simple except [that], because Maori regard it as a taonga tukuiho [a legacy] that shouldn't be sold, that is built into it. But the question of public access has never been a question."
Dr Sharples also sought to reassure people that for many, nothing would change.
"All New Zealanders who were not affected by the 2004 act, nothing will change for them."
The Iwi Leadership Group yesterday congratulated the Maori Party, but only after a hiccup was resolved.
Mr Solomon took Dr Sharples aside and Waikato-Tainui chairman Tukoroirangi Morgan took Mr Finlayson aside to seek an assurance that those iwi that had already settled claims would still be able to claim for customary title.
After getting the assurance that this was so, Mr Morgan said the new plan would be an "extraordinary opportunity".
Rebel Maori Party MP Hone Harawira said last night that the Prime Minister had chosen to "pander to the rednecks rather than give Maori the justice we deserve".
What's in the deal
Q: What tribes or subtribes will be able to claim customary title to the foreshore and seabed?
A: An iwi or hapu will have to prove to the courts or the Government that it has had exclusive and continuous occupation of a coastal area since 1840.
Q: What will they get?
A: A deed specifying the iwi has customary title to a particular coastal area, the right to permit or stop activities, a role in coastal planning, the right to obtain commercial benefit and whatever else the iwi negotiates with the Government.
Q: What guarantees will there be?
A: Guaranteed rights of public access, a guarantee that title cannot be sold, and guaranteed rights of navigation.
Q: How is the National Party proposal different from Labour's law?
A: In four ways:
(1) It restores the right of iwi to go to the High Court to test their claims.
(2) It moves ownership of the foreshore and seabed from the Crown to a no-ownership position.
(3) It contains a "universal recognition" of the mana tukuiho (legacy) of iwi and hapu to foreshore and seabed.
(4) It sets out how councils and other groups shall involve iwi in conservation processes.
Q: What happens next?
A. A bill will be drafted and introduced in August. Select committee hearings will be held, and the bill is scheduled to be passed by the end of the year.